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Port hears biennial operating and capital budget proposals; staff flags modest revenue growth and capital prioritization
Summary
Deputy Director Elaine Forbes presented the Port’s proposed biennial operating budget showing modest revenue growth to roughly $69 million and proposed capital spending of about $21.66 million over two years; staff described funding constraints, four proposed new positions and strategies to protect an operating reserve while covering cruise terminal debt.
Commissioners received an informational presentation on the Port’s proposed biennial operating and capital budgets covering fiscal years 2011–12 and 2012–13.
Deputy Director Elaine Forbes told the Commission staff projects modest revenue growth in the first year to about $69 million, an increase driven by parking meter receipts, harbor services and a projected rise in cruise calls from 42 to 47. Forbes said most commercial rents remain the Port’s largest revenue source and noted several planned vacancies and legacy leases that will reduce base rents in later years; those reductions are partially offset by anticipated increases in percentage rents and by in-lieu payments contemplated for the America’s Cup.
Staff proposed four new operating positions — one engineer, a plumber, a maintenance planner and a gardener — to address critical maintenance and operations needs. Forbes said management’s strategy for absorbing higher fringe-benefit costs and debt-service obligations for the cruise terminal includes delaying or reducing some annual projects, negotiating work-order costs with other city departments and using Port fund balance for a small shortfall in the proposed operating plan.
Andres Acevedo of the Finance Division summarized drivers between the two budget years, noting rising fringe-benefit costs, certain IT and infrastructure expenses and the planned addition of debt service. Lane Forbes (Administration and Finance) presented the two-year capital program totaling roughly $21.66 million, which staff characterized as primarily repair-and-replacement work prioritized by a new capital-scoring rubric aligned to the Port’s 10-year plan. Key capital items include maintenance dredging, match funding for an Army Corps dredging project, Pier 70 historic building work, pier and rail maintenance, and accessibility upgrades.
Forbes said the proposed budget would maintain an operating reserve target near the Commission’s policy (about 15 percent) while funding the cruise terminal debt-service increases. Several commissioners asked questions about the assumptions behind revenue forecasts and the benefit of the biennial budgeting exercise; staff said the two-year baseline helped identify pressures in the second year and informed staffing and project decisions.
The item was informational; commissioners did not take a final vote on the budgets at this meeting. Staff said the budget will move through the mayor’s office and the Board of Supervisors’ processes for final approval.
